January 17, 2017 by Canadian Underwriter
Three hundred and fifteen natural catastrophe events in 2016 generated economic losses of US$210 billion, the highest loss amount in four years and 21% above the 16-average of US$174 billion, according to Aon Benfield’s 2016 Annual Global Climate and Catastrophe Report.
On Tuesday, Aon Benfield, the global reinsurance intermediary and capital advisor of Aon plc, released its 2016 report, which evaluates the impact of the natural disaster events that occurred worldwide during the last 12 months. For historical context, 2016 was the seventh highest year on record with the combined economic loss exceeding the US$200 billion threshold for the first time since 2013.
Aon Benfield said in a statement that the top three perils – flooding, earthquake and severe weather – combined for 70% of all economic losses in 2016. While at least 72% of catastrophe losses occurred outside of the United States, it still accounted for 56% of global insured losses.
Overall, just 26% (US$54 billion) of overall economic losses were covered by insurance in 2016 due to a higher percentage of damage occurring in areas with a lower insurance penetration, Aon Benfield reported in the statement. However, the public and private insurance industry losses were 7% above the 16-year average and the highest insured loss total since 2012. Last year marked the end of a four-year downward trend since the record year in 2011.
According to the report, there were at least 34 natural disasters that caused more than US$1 billion in economic damage around the globe, though just 11 of those events had insurable losses reach the same threshold. The vast majority of the billion-dollar events (30) were weather-related, and only nine had insured losses at or above US$1 billion.
“After a decline in catastrophe losses during the previous four years, 2016 marked a bit of an uptick in natural peril costs to the global economy,” said Steve Bowen, director and meteorologist at Impact Forecasting, Aon Benfield’s catastrophe model development team. Bowen added that when recognizing there has been a nominal increase in both annual and individual weather disaster costs in recent decades, factors such as climate change, more intense weather events, greater coastal exposures and population migration shifts are all contributors to the growing trend. “With these parameters in place, and forecasts continuing to signal greater risk and vulnerability, it is anticipated that weather-related catastrophe losses will further increase in the coming years,” he said.
Notable events driving economic and insured losses in 2016 included: